RLJ Lodging Trust Acquires Two Premium-Branded Hotels and One Planned Hotel Conversion in Downtown Houston for $79.5 Million
RLJ Lodging Trust (the “Company”) (NYSE: RLJ) today announced that it
acquired the historic Humble Oil Building complex in downtown Houston,
for a purchase price of $79.5 million, or approximately $151,000 per key
based on a combined forward room count of 528 keys.
The Humble Oil Building is a three-tower complex that occupies an entire
city block in downtown Houston. The complex consists of an 82-unit
apartment tower that will be converted to a 166-room SpringHill Suites
and two existing hotels, the existing 191-room Courtyard Houston
Downtown Convention Center (“the Courtyard”) and the 171-room Residence
Inn Houston Downtown Convention Center (“the Residence Inn”). The
purchase price represents a forward capitalization rate of approximately
10.1% for the Courtyard and 9.5% for the Residence Inn based on each
hotel’s projected 2013 net operating income and applicable purchase
price allocation. The Company purchased this portfolio of assets with
its revolving credit facility.
“Our ability to execute this off-market transaction required the
expertise, experience, and relationships that are unique to RLJ,”
commented Thomas J. Baltimore, Jr., President and Chief Executive
Officer. “Acquiring the Humble Oil Building complex represents a
value-add opportunity. Both existing hotels have notable upside
potential and our extensive experience managing complex renovations will
enable us to deliver another conversion property that will help drive
economies of scale.”
An estimated $70.0-million renovation of the premises was completed in
2003 that restored several historical features and converted the complex
into its present use of two hotels and one apartment tower. The Company
will leverage its proven in-house capabilities to convert the existing
apartment tower into a high-quality, institutional-grade hotel. The
conversion is expected to be completed in mid-2015 and will enable the
Company to capitalize on design, brand, and operational efficiencies.
The Courtyard and the Residence Inn underwent 6-year Marriott “Refresh”
renovations in 2010 and 2011, respectively.
The Company remains selective and disciplined in its pursuit to acquire
assets in markets that will create long-term shareholder value.
Houston’s revenue per available room growth of 13.8% in 2012 was the
third highest among the top 25 U.S. lodging markets. The Central
Business District (“CBD”), the submarket in which the hotels are
located, is currently underrepresented with premium-branded,
focused-service hotels. Therefore, the Company expects that the hotels’
affiliation with Marriott's strong reservation system and guest loyalty
program, as well as their proximity to multiple demand generators, will
benefit all three assets and position them for strong growth.
The hotels’ prime location in Houston’s CBD provides access to a wide
variety of demand generators. While Houston is known as the energy
capital of the world, its economy is well diversified. According to the
Greater Houston Partnership, Houston ranks third among U.S. cities for Fortune
500 company headquarters, behind only New York and Chicago. With
almost 40 million square feet of office space in the CBD housing
companies within the energy, education, healthcare, and transportation
sectors, corporate demand is expected to continue to drive future growth
for the hotels. Furthermore, the city’s convention center, three major
sporting arenas, and four performing arts companies, all located in
downtown, create additional sources for group and leisure demand.
Houston serves as a major gateway for Latin America and several other
countries. Houston's largest airport, the George Bush Intercontinental
Airport, offers nonstop service to approximately 116 domestic
destinations, 70 international destinations, and offers service to more
Mexican destinations than any other airport in the United States.
Overall, Houston is expected to benefit from continued economic growth
in the energy sector as well as expansion of the healthcare,
distribution, and trade industries. With limited premium-branded,
focused-service hotels in the submarket, as well as the implementation
of new efficiencies within the complex, the Company expects that these
hotels will be well positioned to outperform.
With the addition of these three assets, the Company now owns 147 hotels
with nearly 22,000 rooms and one planned hotel conversion across 21
states and the District of Columbia.
About Us
RLJ Lodging Trust is a self-advised, publicly traded real estate
investment trust focused on acquiring premium-branded, focused-service
and compact full-service hotels. Additional information may be found on
the Company’s website at http://rljlodgingtrust.com.
Forward Looking Statements
Certain statements in this press release, other than purely
historical information, including estimates, projections, statements
relating to our business plans, objectives and expected operating
results, and the assumptions upon which those statements are based, are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act
of 1934, as amended. These forward-looking statements generally are
identified by the use of the words “believe,” “project,” “expect,”
“anticipate,” “estimate,” “plan,” “may,” “will,” “will continue,”
“intend,” “should,” “may” or similar expressions. Although we believe
that the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, beliefs and expectations, such
forward-looking statements are not predictions of future events or
guarantees of future performance and our actual results could differ
materially from those set forth in the forward-looking statements. Some
factors that might cause such a difference include the following: the
current global economic uncertainty, increased direct competition,
changes in government regulations or accounting rules, changes in local,
national and global real estate conditions, declines in the lodging
industry, seasonality of the lodging industry, risks related to natural
disasters, such as earthquakes and hurricanes, hostilities, including
future terrorist attacks or fear of hostilities that affect travel, our
ability to obtain lines of credit or permanent financing on satisfactory
terms, changes in interest rates, access to capital through offerings of
our common and preferred shares of beneficial interest, or debt, our
ability to identify suitable acquisitions, our ability to close on
identified acquisitions and integrate those businesses and inaccuracies
of our accounting estimates. A discussion of these and other risks and
uncertainties that could cause actual results and events to differ
materially from such forward-looking statements is included in "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of the Company's Annual Report on
Form 10-K for the year ended December 31, 2012. Given these
uncertainties, undue reliance should not be placed on such statements.
Except as required by law, we undertake no obligation to update or
revise publicly any forward-looking statements, whether as a result of
new information, future events or otherwise.
